I was told of a time when car seats were not required for cars, minimum wage was less than $2 per hour, and leaving your front door open was not an accident but a common practice. Many things have changed over the years. However, one thing remains true in business: how can resources be maximized to produce more profit? An overlooked area is the usage of Microsoft Excel to pinpoint areas for business growth.
The application and combination of the different tools in Microsoft Excel can lead to a competitive business advantage. These creative, artistic solutions can give our organizations an edge in this competitive landscape. Below are a few ways Excel can help businesses grow.
1. Increase Sales: At its core the growth of any business primarily depends on revenue growth. Excel can be used to help organizations increase sales. That tool can be used to target profitable demographics, customer segmentation and product\service partnering. Every business has a particular array of demographics that it serves. However, it may be possible to increase sales by looking at sales activity related to age over time. A Microsoft Excel Pivot Table can be used to reveal trends in sales. For example which age group contributes most to sales? Which demographic group is growing fastest? Armed with information like this a business owner can focus its marketing efforts and product\service offerings to better target the group, garner more sales and more growth. Customer segmentation is the process of grouping customers by like characteristics. As mentioned before sales activity can be grouped by age, income level, location, to name a few. That type of analysis can be used to find the most profitable customers. The pareto principle, often applied to business, states that 80% of sales activity are attributed to 20% of the customers. Who are those “vital few” in your organization?
2. Strategic Decisions: Better and more informed decisions translate to more money. That is why insider trading is illegal. Certain people are privy to more information than the average investor. Many small and medium size organizations make decisions based on intuition. Strategic decisions should be based on facts. What should be the next product line? Which demographic should I target? What partnerships should I explore? Often, decisions based on intuition are reaffirmed due to positive outcomes. However, the business environment changes so fast. Microsoft Excel can be used to develop a financial model. A model is a representation or replica of something else. So, building an Excel model is, at its core, creating a financial representation of a company and showing how its bottom-line is affected by changes in key drivers. A financial model can detail the complex relationships within an organization that impact the profitability. Business decisions should be tempered with instruments, such as a financial model. Favorable outcomes due to intuition should not reinforce such attitudes or practices. It is only a matter of time before intuition fails and facts prevail. We should base our decisions on fact, not fiction.
3. Multiply Manpower: Excel can give the average ability to do more with less (or more with the same amount). In every business, manual tasks are needed. However, anything that can be automated should be. Visual Basic for Application (VBA) is a programming language used to automate redundant tasks in Excel. Tasks which can take a physical person hours or days to complete can be automated with VBA and be executed in a matter of seconds or minutes. With this time savings, labor resources can be used in other ways, such as garnering more business or adding more value to products\services to further differentiate from competitors.
4. First To Market: Think Music:IPod, ThinkTablet: IPad Those products were groundbreaking when they hit the market. To date those products garner a large majority of their respective markets. In part it’s due to the first to market strategy. Those products hit the market at the right time. Small and medium size businesses can also employ the first to market strategy through research. Microsoft Excel can be used to target proper markets. Tools, such as pivot tables which are used to aggregate large data sets and formulas. PMT (payment) and NPV (net present value), which look at financing; and the correlation analysis tool are just a few tools that can help businesses to be first to market.
5. Barter Process: Many organizations develop in-house tools for specific purposes. A colleague once informed me that many institutions trade in-house tools. They share tools created in-house in exchange for tools created at another institution. This maybe more applicable in the Non-profit sector. That same process of exchange can be used with tools built in the Excel environment. Imagine implementing an in-house tool developed by another organization! Perhaps, it can be Return on Investment workbook or a VBA routine that helps someone analyze and order inventory automatically. Huge gains can be incurred by receiving the best from another organization. In order for that to work, an organization must first have something of value to offer.
Microsoft Excel can be used to help organizations increase sales, cut costs, discover new markets and serve as a bargaining chip. Microsoft Excel is the solution to pressing business problems.